Pearson, Robin, "Towards an Historical Model of Services Innovation: The Case of the Insurance Industry, 1700-1914," 1997

Although this article deals mainly with British finance and the insurance industry in particular, some worthwhile lessons about the development of these industries over the long term can be drawn. Few new forms of insurance were developed in the eighteenth century, although fire, life and marine insurance emerged at the end of the sixteenth. Accident insurance commenced in the 1840s but not boom and diversify until the end of the century. "Secondary product innovation (SPI) - new products for new risks - may depend solely upon process innovations within the insurance sector and does not need any external stimulus to generate such products," Pearson writes. "Examples might include the issue of bonus policies by life assurers during the 1820s, or the use of reinsurance by fire and life offices, also during the early nineteenth century." Coverage for luggage and livestock became available in the early to middle nineteenth century, but innovations like auto insurance and loss of salary protection had to wait until the 1890s. Some of these experiments can be explained simply by the advent of new technology or economic activities, but, as Pearson says, "no such explanation can be given for the lack of burglary, boiler and personal accident insurance before 1850." The author notes that public concern over the safety of property rose in the late 1700s and early 1800s without a call for insurance protection, although the increasing productivity and growing wealth of the latter century can certainly help explain the eventual offering of new insurances for personal property by mid-century. From the British example, Pearson argues that regulatory constraints inhibited innovation rather fostering it, as in the Silber model: "Full incorporation was little used by early British insurers, in sharp contrast to the US where there were nearly 40 corporations selling fire, life and marine insurance by the 1800s." Ultimately, the author concludes that "insurance innovation was incremental over a long time period before building up to a crescendo of new product development in the more sophisticated markets of the late nineteenth century."

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